Zepp Health Corp (ZEPP) 2023 Q4 法說會逐字稿

Hello, ladies and gentlemen, thank you for standing by for Zepp Health Corporation fourth quarter and full year 2023 earnings conference call. (Operator Instructions) Today's conference call is being recorded.

大家好，女士們、先生們，感謝您出席 Zepp Health Corporation 第四季和 2023 年全年收益電話會議。（操作員指示）今天的電話會議正在錄音。

I will now turn the call over to your host, Mr. Chris Shaw, Director of Investor Relations for the company. Please go ahead, Chris.

我現在將把電話轉給東道主、公司投資者關係總監 Chris Shaw 先生。請繼續，克里斯。

Hello, everyone, and welcome to Zepp Health Corporation's fourth quarter and full year 2023 earnings conference call. The company's financial and operating results were issued in a press release from the newswire services earlier today and are posted online. You can also view the earnings press release and slides referred to on this call by visiting the IR section of the company's website at zepp.com.

大家好，歡迎參加 Zepp Health Corporation 第四季和 2023 年全年財報電話會議。該公司的財務和經營業績今天稍早在新聞專線服務的新聞稿中發布，並發佈在網路上。您也可以造訪該公司網站 zepp.com 的 IR 部分，查看本次電話會議中提到的收益新聞稿和幻燈片。

Participating in today's call are Mr. Wayne Wang Huang, our Chairman of the Board of Directors and Chief Executive Officer, and Mr. Leon Deng, our Chief Financial Officer. The company's management will begin with prepared remarks and the call does include with a Q&A session. Mr. Mike Yeung, our Chief Operating Officer, will join us for the Q&A session.

參加今天的電話會議的是我們的董事會主席兼執行長黃偉先生和財務長鄧立先生。該公司管理層將以準備好的發言開始，電話會議還包括問答環節。我們的營運長楊麥克先生將參加我們的問答環節。

Before we come to a quick note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today.

在我們快速指出之前，今天的討論將包含根據 1995 年美國私人證券訴訟改革法案的安全港條款做出的前瞻性陳述。前瞻性陳述涉及固有風險和不確定性。因此，公司的實際結果可能與今天表達的觀點有重大差異。

Further information regarding these and other risks and uncertainties are included in the company's annual report on Form 20-F for the fiscal year and the December 31, 2023, and other filings filed with the US Securities and Exchange Commission. The Company does not assume any obligation to update any forward-looking statements except as required under applicable law.

有關這些以及其他風險和不確定性的更多信息，請參閱該公司本財年和截至 2023 年 12 月 31 日的 20-F 表格年度報告以及向美國證券交易委員會提交的其他文件。除適用法律要求外，本公司不承擔更新任何前瞻性聲明的義務。

Please note that GAAP earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial information. That press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

請注意，公認會計準則收益新聞稿和本次電話會議包括對未經審計的公認會計準則財務資訊以及未經審計的非公認會計準則財務資訊的討論。該新聞稿包含未經審計的非公認會計準則衡量標準與未經審計的最直接可比較的公認會計準則衡量標準的調節表。

I will now turn the call over to our CEO, Wayne. Please go ahead.

我現在將把電話轉給我們的執行長韋恩。請繼續。

Hello, everyone. Welcome and thank you for joining our call. In 2023 amidst global macro economy uncertainties, our Ally oriented strategy and ongoing business model transformation began to yield fruit. This strategy shift has enabled us to strengthen our commitment to becoming a global provider of cutting-edge smart wearable health care solutions.

大家好。歡迎並感謝您加入我們的通話。2023年，在全球宏觀經濟不確定性的背景下，我們面向盟友的策略和持續的商業模式轉型開始結出碩果。這項策略轉變使我們更加堅定了成為尖端智慧穿戴醫療保健解決方案全球供應商的承諾。

Before we dive into our earnings, I would like to spend some time talking about our strategy as we reflect on 2023. Over the past two years, we have been on a transformation test, a journey to become less dependent on Xiaomi branded products and is that develop a self-reliant company driven by its sales branded product sales.

在我們深入討論我們的收益之前，我想花一些時間談談我們對 2023 年的策略。過去兩年，我們一直在進行轉型試驗，減少對小米品牌產品的依賴，發展一家以銷售品牌產品銷售為驅動的自力更生的公司。

This shift is starting to show promising results, as evidenced by our two consecutive non-GAAP operating profit. Looking at 2024 voting on the actions we have taken in the past, we are excited to be making a strategic leap and harnessing the synergy between our product and sales channel.

這項轉變已開始顯現出可喜的成果，我們連續兩年的非公認會計準則營業利潤就證明了這一點。回顧 2024 年對我們過去採取的行動的投票，我們很高興能夠實現策略飛躍並利用我們的產品和銷售管道之間的協同作用。

This leap forward is grounded in three core pillars. First, we are putting greater emphasis on R&D and product driven innovation, where we will fully embrace AI and offer more innovative products that closely align with needs of our key markets.

這一飛躍基於三個核心支柱。首先，我們更重視研發和產品驅動創新，全面擁抱人工智慧，提供更多緊貼重點市場需求的創新產品。

Second, we are continuing to ensure profitable growth, maximizing the value we realize from each and every product showed. Guided by this approach, we are choosing profitability over scale in some regions such as India which transitioned in 2023 from a loss-making market to a profitable one. In certain other areas, we are investing aggressively to gain market share, aiming to generate long-term returns.

其次，我們將繼續確保獲利成長，最大限度地提高我們從展示的每件產品中實現的價值。在這種方法的指導下，我們在印度等一些地區選擇獲利而非規模，該地區於 2023 年從虧損市場轉變為獲利市場。在某些其他領域，我們正在積極投資以獲得市場份額，旨在產生長期回報。

Last but not least, we will invest in branding and marketing communications in order to enhance our brand presence by welcoming our Amazfit Active and increasing sponsorship of big sports events. I believe you will see the Amazfit brand more visible across the worlds in the coming quarters.

最後但並非最不重要的一點是，我們將投資品牌和行銷傳播，透過推出 Amazfit Active 並增加對大型體育賽事的贊助來增強我們的品牌影響力。我相信在接下來的幾個季度中，您將看到 Amazfit 品牌在全球範圍內更加引人注目。

These three pillars, I am confident we can propel our flying wheel and generate a higher return from our employees and shareholders in the long run.

透過這三大支柱，我相信我們能夠推動我們的飛輪，並從長遠來看為我們的員工和股東帶來更高的回報。

In the first quarter of 2023, our focus on strategic transformation towards a more self-reliant revenue stream has gained traction and at reducing dependency on a single customer, growing revenue concentration and shifting our emphasis increasingly on self-branded products. These efforts to become self-reliant have made significant progress.

2023 年第一季度，我們更加關注向更自力更生的收入來源進行策略轉型，減少對單一客戶的依賴，提高收入集中度，並將重點越來越多地轉向自有品牌產品。這些自力更生的努力已經取得了重大進展。

As a result, despite a year-over-year decline in our revenue during the fourth quarter, our self-branded products maintained a sequential growth momentum with a quarter-over-quarter growth of 14.8% and contributed to 91% of our top line, up from 77% in the previous year.

因此，儘管第四季營收年減，自有品牌產品仍維持季增勢頭，季增14.8%，佔營收的91% ，高於去年的 77%。

Notably, our gross margin reached a record high in the fourth quarter, a testament to our effective prior position of profitability our scale. This significant achievement was largely driven by our higher margin self-branded products, launch of the Amazfit Active and Amazfit Active Edge series in Q4 as well as the Amazfit Balance special edition, enhance our product portfolio and significantly elevated our market presence.

值得注意的是，我們的毛利率在第四季度創下了歷史新高，證明了我們在獲利規模方面的有效領先地位。這項重大成就主要得益於我們利潤率較高的自有品牌產品、第四季度推出的Amazfit Active 和Amazfit Active Edge 系列以及Amazfit Balance 特別版，增強了我們的產品組合併顯著提升了我們的市場佔有率。

At the same time, we will continue to prove our retail channels and enhance our product mix to sustain the higher gross margin trend, leveraging self-branded revenue to bolster the company's overall performance and steering us towards sustained profitability.

同時，我們將繼續證明我們的零售通路並增強我們的產品組合，以維持較高的毛利率趨勢，利用自有品牌收入來支撐公司的整體業績，並引導我們實現持續盈利。

To further solidify our market-leading position in smart wearables, we continue diversifying our product lineup to meet evolving market demands. In October, we launched two new lifestyle smart watches, the Amazfit Active and the Amazfit Active Edge in Europe and APAC.

為了進一步鞏固我們在智慧型穿戴裝置領域的市場領先地位，我們繼續豐富我們的產品陣容，以滿足不斷變化的市場需求。10月，我們在歐洲和亞太地區推出了兩款全新生活方式智慧手錶Amazfit Active和Amazfit Active Edge。

These smart watches prepared for today's urban urbanized branding elegance with powerful functionality, incorporates the AI powered web coach and for lastly integrated into our users [haptic launch]. Adapt innovation is at the core of everything we do.

這些智慧手錶為當今城市化的品牌優雅做好了準備，具有強大的功能，整合了人工智慧驅動的網路教練，並最終整合到我們的用戶中[觸覺啟動]。適應創新是我們所做一切的核心。

To reflect this vision, I would like to highlight some of our success in smart wearable technology at CES 2024. The CES launch of the Amazfit Helio Ring, our first smart ring underlies our dedication to providing pioneering accessible health care solutions.

為了體現這一願景，我想在 CES 2024 上重點介紹我們在智慧穿戴技術方面取得的一些成功。我們在 CES 上推出了我們的首款智慧環 Amazfit Helio Ring，這體現了我們致力於提供開創性的無障礙醫療保健解決方案的決心。

The Amazfit Helio Ring to offer and pillar recoveries that part of athletes. These developments in pet or mice, our commitment to empowering individuals to take control of their health and well-being through our smart wearables.

Amazfit Helio Ring 為運動員提供並支撐這部分的恢復。寵物或老鼠的這些發展，我們致力於使個人能夠透過我們的智慧穿戴裝置控制自己的健康和福祉。

Building on the momentum of our product expansion, we remain dedicated to leveraging Zepp OS. We recently introduced Zepp OS 3.5 with Zepp Flow at MWC Barcelona 2024 in February. A substantial update carried by large language model AI, marking a significant lead in wearable intelligence devices and bringing unprecedented levels of interaction.

憑藉我們產品擴展的勢頭，我們仍然致力於利用 Zepp OS。我們最近在 2 月的 MWC 巴塞隆納 2024 上推出了 Zepp OS 3.5 和 Zepp Flow。大語言模型AI的大幅更新，標誌著穿戴式智慧型裝置的顯著領先，帶來前所未有的互動水平。

Zepp Flow offers seamless natural language liquidation to provide users with exactly what they want from starting an alarm, the activating, the always-on display feature to providing feedback on last night's sleep quality and at analyzing the readiness score from the previous day's activities and offering recommendations for improvement in the following days. All can be done by activating this the watch using human natural language and without the need to memorize any predefined commands.

Zepp Flow 提供無縫的自然語言清算，為用戶提供他們想要的一切，從啟動鬧鐘、激活、常亮顯示功能，到提供昨晚睡眠質量的反饋，以及分析前一天活動和服務的準備分數並提出接下來幾天的改進建議。所有這些都可以透過使用人類自然語言來啟動手錶來完成，而無需記住任何預先定義的命令。

Additionally, we provide our users with consistent software updates. For example, the Amazfit Balance now features new chaining templates, new scheme map functions and enables smart NFC card payments in Europe, enhancing both the sporting experience and general daily convenience.

此外，我們也為用戶提供一致的軟體更新。例如，Amazfit Balance現在配備了新的連結模板、新的方案地圖功能，並在歐洲支援智慧NFC卡支付，增強了運動體驗和日常便利性。

Our drop pressure measurement software has been expanded to a broader range of products, including the Amazfit Falcon Active Shooter Pro, Amazfit T-Rex Archer, Amazfit T-Rex 2 and [GDFL], all aiming to deliver personalized and advanced wellness supports to a greater number of users.

我們的落壓測量軟體已擴展到更廣泛的產品，包括Amazfit Falcon Active Shooter Pro、Amazfit T-Rex Archer、Amazfit T-Rex 2和[GDFL]，所有這些都旨在為人們提供個人化和先進的健康支援。更多的用戶。

Our product's seamless integration of hardware and software not only assist users to improving their well-being, but also updates their live style. I'm happy to share a comparing example that comes from one of our Japanese users who found himself in a snowstorm during a hiking trip in Mont Blanc. Fortunately, our T-Rex 2 guided him safely back.

我們的產品硬體和軟體的無縫整合不僅幫助用戶改善他們的福祉，而且更新了他們的生活方式。我很高興分享一個來自我們的一位日本用戶的比較範例，他在勃朗峰徒步旅行時發現自己陷入了暴風雪中。幸運的是，我們的霸王龍 2 把他安全帶回來了。

He share his experience on YAMAP, Japan's leading outdoor app and even send us a thank-you e-mail. Stories like these fill us with pride as we see our products contribute to the enthusiasm and certification of our users.

他在日本領先的戶外應用程式 YAMAP 上分享了他的經驗，甚至給我們發了一封感謝電子郵件。當我們看到我們的產品為用戶的熱情和認證做出貢獻時，這樣的故事讓我們感到自豪。

2023 leaves behind a tab G wall oven disposed challenges and tie in some. As we are transforming into a self-reliant company and shifting our strategy from pursuing pure revenue growth to profitability. We have seen a decline in revenue.

2023 年留下了一個選項卡 G 壁式烤箱解決了挑戰並在一些方面取得了進展。我們正在轉型為一家自力更生的公司，並將我們的策略從追求純粹的收入成長轉向獲利。我們看到收入下降。

Despite that our Amazfit branded products contributed to 74% of our total revenue compared to 59% in 2022. Furthermore, our efforts translated into a commendable 36% dilution in non-GAAP net loss, marking a pivotal shift for us to be achieved profitability in both Q3 and Q4, leveraging our cost margin and cost management strategies.

儘管如此，我們的 Amazfit 品牌產品仍占我們總收入的 74%，而 2022 年這一比例為 59%。此外，我們的努力轉化為非公認會計原則淨虧損稀釋了 36%，值得稱讚，這標誌著我們利用成本利潤率和成本管理策略在第三季和第四季實現盈利的關鍵轉變。

Another operational milestone in Q4 2023 was the successfully completed mass production of our Amazfit Bip watch line at our Vietnam factory. These achievements not only underscores the execution of our multi-sourcing global supply chain strategy, but also pave the way for further global expansion.

2023 年第四季的另一個營運里程碑是我們的 Amazfit Bip 手錶生產線在越南工廠成功完成量產。這些成就不僅彰顯了我們多源全球供應鏈策略的執行，也為進一步的全球擴張鋪平了道路。

Additionally, we have witnessed a surge in product visibility, particularly on social media platforms and through key opinion leaders in documents, including a growing market presence and as demand consumer engagement.

此外，我們也見證了產品知名度的激增，特別是在社群媒體平台上和透過文件中的關鍵意見領袖，包括不斷增長的市場存在和消費者參與的需求。

Looking to the future, we see a healthy and sustainable growth trajectory for Zepp. Our relentless drive for innovation and strategic expansion of our product offerings positions us to effectively adjust evolving demands of our global user community.

展望未來，我們看到 Zepp 健康且可持續的成長軌跡。我們對產品創新和策略擴展的不懈追求使我們能夠有效地調整全球用戶社群不斷變化的需求。

Despite headwinds posed by macro-economic challenges, our focus remains steadfast on bolstering profitability and seeking dynamic opportunities to propel our resilience growth and secure greater profitability. This approach not only strengthens our competitive edge, but also ensures our long-term success in the ever-involving smart wearable industry.

儘管宏觀經濟挑戰帶來了阻力，但我們的重點仍然堅定不移地提高獲利能力，並尋求動態機會來推動我們的韌性成長並確保更大的獲利能力。這種做法不僅增強了我們的競爭優勢，也確保了我們在不斷發展的智慧穿戴產業中取得長期成功。

I will now turn the call over to Leon to go over the highlights of our fourth quarter financial results.

我現在將把電話轉給萊昂，回顧一下我們第四季財務表現的亮點。

Thank you, Wayne. Greetings, everyone, and thank you again for joining our earnings call today. I would like to start by discussing some key metrics from our financial results for the fourth quarter of 2023.

謝謝你，韋恩。大家好，再次感謝您參加我們今天的財報電話會議。我想先討論 2023 年第四季財務表現的一些關鍵指標。

As we have mentioned, in the past, the border consumer electronics industry has yet to recover and remain subdued across our geographies. This is partially due to a sluggish demand for high-value consumer electronics products such as TV and mobile phones, coupled with challenging economic conditions in parts of the EMEA and APAC regions.

正如我們所提到的，過去，邊境消費電子產業尚未復甦，並且在我們的地區仍然處於低迷狀態。部分原因是對電視和手機等高價值消費性電子產品的需求疲軟，加上歐洲、中東和非洲和亞太地區部分地區經濟形勢嚴峻。

However, we saw some modestly improved performance in the smartwatches for outdoor/sports category, though the market remains highly competitive. Amidst these challenges we steadfastly adhered to our strategic plan.

然而，儘管市場競爭仍然很激烈，但我們看到戶外/運動類別智慧手錶的性能略有改善。面對這些挑戰，我們堅定不移地堅持我們的策略計畫。

This holiday season, we took an unconventional approach by launching that extended pre-Christmas promotion in selected products. Traditionally, we're focused our offering discounts centered around Black Friday and Cyber Monday. However, this year, we decided to align with consumer expectations for ongoing discounts throughout the holiday season.

這個假期，我們採取了非常規的方式，在選定的產品中推出了聖誕節前的延長促銷活動。傳統上，我們的折扣集中在黑色星期五和網路星期一。然而，今年，我們決定符合消費者的期望，在整個假期期間持續提供折扣。

This strategy resonated well with our consumers. We have met our own sales expectations while delivering strong gross margins for the quarter. All of this is a testament to our strong brand, our great product lineup and the value that our products can offer.

這項策略引起了我們消費者的強烈共鳴。我們達到了自己的銷售預期，同時本季毛利率強勁。所有這些都證明了我們強大的品牌、出色的產品陣容以及我們的產品所能提供的價值。

However, given that this successful promotion occurred later in the fourth quarter, it is likely that it might have advanced some sales from Q1 of 2024. Since Q1 is typically our slowest quarter of the year, we are adopting a more cautious outlook for the revenue projections in the upcoming quarter.

然而，考慮到這次成功的促銷活動發生在第四季度晚些時候，它可能會比 2024 年第一季提高一些銷售額。由於第一季通常是我們一年中最慢的季度，因此我們對下一季的營收預測採取更謹慎的展望。

I would like to emphasize that we are laser focused on the areas within our control. We're holding our market share steady without sacrificing gross margin. As we stand at the start of a multiyear product cycle, we're beginning to harvest the benefits of our research and development investments.

我想強調的是，我們高度關注我們控制範圍內的領域。我們在不犧牲毛利率的情況下保持穩定的市場份額。當我們正處於多年產品週期的開始時，我們開始收穫研發投資的好處。

This allows us to branch into new categories and introduce innovative products, such as the Helio Ring we unveiled at CES with more announcements planned for the coming quarters. We are also broadening our distribution channels to align with where our customers prefer to shop.

這使我們能夠拓展新的類別並推出創新產品，例如我們在 CES 上推出的 Helio Ring，並計劃在未來幾季發布更多產品。我們也正在拓寬我們的分銷管道，以適應客戶喜歡的購物地點。

Additionally, we are reinventing our brand marketing and activation to tap into sports and address new audiences. As Wayne highlighted earlier, you will see our brand featured more prominently at sports events and we'll welcome more athletes to join our Amazfit family. That strategic positioning of the company aims to accelerate our growth while managing expenses carefully to ensure margin expansion in the years to come.

此外，我們正在重塑品牌行銷和激活，以進入體育領域並吸引新受眾。正如 Wayne 之前強調的那樣，您將看到我們的品牌在體育賽事中更加突出，我們將歡迎更多運動員加入我們的 Amazfit 大家庭。公司的策略定位旨在加速我們的成長，同時謹慎管理費用，以確保未來幾年的利潤率擴張。

Now turning to Q4 sales, our overall sales for the quarter was USD85 million/ RMB0.6 billion, aligned with the lower end of our guidance as we navigated the cyclical challenges in our categories and a highly promotional environment. This reduction in sales was influenced partially by our strategic decision to prioritize profitability over scale with foreign exchange fluctuations also having a negative impact.

現在轉向第四季度的銷售，我們該季度的整體銷售額為 8500 萬美元/6 億元人民幣，與我們應對類別週期性挑戰和高度促銷環境時的指導下限一致。銷售額下降的部分原因是我們的策略決策將獲利能力置於規模之上，而外匯波動也產生了負面影響。

In markets like China and India, our business model mirrors this emphasis on profitability over scale. The shift has resulted in these markets turning net profit positive in 2023. Furthermore, despite year-over-year revenue declines in our self-branded products, we achieved positive quarter-over-quarter revenue growth convincing us that our strategic approach will empower our business long-term sustainability and resilience.

在中國和印度等市場，我們的商業模式反映了對獲利能力而非規模的重視。這一轉變導致這些市場在 2023 年淨利轉正。此外，儘管我們的自有品牌產品收入同比下降，但我們實現了季度環比收入的積極增長，這使我們相信我們的策略方法將增強我們業務的長期可持續性和彈性。

Moving on to gross margin, which can be influenced by various factors such as product mix, product launch, timing and product life cycles, including model upgrades. As Wayne indicated earlier, our Q4 2023 gross margin reached an impressive 34.7%, the pricing Q3 and marking the highest gross margin in the company's history.

接下來是毛利率，毛利率可能受到產品組合、產品發布、時間安排和產品生命週期（包括型號升級）等多種因素的影響。正如 Wayne 先前指出的，我們 2023 年第四季的毛利率達到了令人印象深刻的 34.7%，第三季的定價也創下了公司歷史上最高的毛利率。

This achievement can be attributed to a favorable product mix, a higher proportion of new product launches such as Amazfit Active and Amazfit Active Edge series and reduced (technical difficulty) activities. Importantly, we anticipate this positive trend in gross margin to extend into Q1 and throughout 2024.

這項成績得益於良好的產品結構、Amazfit Active、Amazfit Active Edge系列等新產品發布比例較高以及活動（技術難度）降低。重要的是，我們預計毛利率的這種積極趨勢將延續到第一季和整個 2024 年。

Now, let's turn our attention to costs. As we have discussed, cost management remains a critical area of focus for our company, both in terms of their absolute amount and as a percentage of sales.

現在，讓我們把注意力轉向成本。正如我們所討論的，成本管理仍然是我們公司關注的關鍵領域，無論是從絕對金額還是佔銷售額的百分比來看。

As we continue to exercise disciplined control over our expenses during the quarter, since Q3 2020, we have consistently reduced overall operating costs, all while strategically investing in innovative products and technologies as well as geographical expansion.

自 2020 年第三季以來，隨著我們在本季繼續嚴格控制支出，我們不斷降低整體營運成本，同時對創新產品和技術以及地理擴張進行策略性投資。

As a result, non-GAAP operating expenses for Q4 stood at USD27 million, RMB191 million comparable with Q3 2023 and consistent with the guidance which we provided. Adjusted research and development expenses in the fourth quarter of 2023 was [$11 million], a decrease of 30.8% year-over-year. This comprised 12.8% of revenue versus 10% for the same period in 2022.

因此，第四季的非 GAAP 營運費用為 2,700 萬美元，約合人民幣 1.91 億元，與 2023 年第三季相當，並且與我們提供的指導一致。2023年第四季調整後研發費用為[1,100萬美元]，較去年同期下降30.8%。這佔營收的 12.8%，而 2022 年同期為 10%。

The decrease was primarily attributed to our refined research and development strategy as we constantly access resources efficiently to maximize return on investment and productivity. Also, we integrated AI based R&D platform to improve our efficiency. At the same time, we're committed to investing in new technologies and AI functions to maintain our competitive edges against our peers.

這一下降主要歸因於我們完善的研發策略，因為我們不斷有效地獲取資源，以最大限度地提高投資回報和生產力。此外，我們還整合了基於人工智慧的研發平台，以提高我們的效率。同時，我們致力於投資新技術和人工智慧功能，以保持我們相對於同行的競爭優勢。

Adjusted selling and marketing expenses in the fourth quarter of 2023 was USD12 million, a year-over-year decrease of 31%. These expenses accounted for 14.3% of revenues compared to 11.6% in the same period in 2022.

2023年第四季調整後銷售和行銷費用為1,200萬美元，年減31%。這些費用佔收入的 14.3%，而 2022 年同期為 11.6%。

The reduction in the amount was mainly due to our ongoing efforts to improve profitability and refine ourselves channel mix in addition to the in-depth enhancement of our retail channels, such efforts also included a strategic allocation of stuff throughout our South region.

金額的減少主要是由於我們不斷努力提高獲利能力和完善通路組合，除了零售通路的深入加強外，還包括對整個南方地區的人員進行策略配置。

Additionally, we launched Amazfit Wellness Wonderland and a pop-up store in Berlin to spotlight offerings during the holiday season. We showcased our brand concept through a collaboration with Siciliano Contemporary Ballet at the launch of the Amazfit Balance Special Edition watch, joined significant media attention.

此外，我們還在柏林推出了 Amazfit Wellness Wonderland 和一家快閃店，以突出節日期間的產品。我們透過與西西里當代芭蕾舞團合作，在Amazfit Balance特別版手錶發布會上展示了我們的品牌理念，引起了媒體的廣泛關注。

This concept was also highlighted in the Zepp house 10 years of innovation campaign. We are committed to making smart investments in marketing and branding initiatives that will fuel our long-term growth.

這一理念在 Zepp 品牌 10 年創新活動中也得到了強調。我們致力於在行銷和品牌推廣活動上進行明智的投資，這將推動我們的長期成長。

Adjusted G&A expenses amounted to USD4.0 million in the fourth quarter of 2023, a year-over-year decline of 37.8%. These expenses represented 4.8% of revenues compared with 4.3% in 2022. This decrease in absolute amount was largely attributed to our efforts in optimizing personnel and enforcing strict cost control over administrative expenses.

2023 年第四季調整後的一般管理費用為 400 萬美元，年減 37.8%。這些費用佔收入的 4.8%，而 2022 年為 4.3%。絕對金額下降主要得益於我們優化人員、嚴格管理費用成本控制。

Looking ahead, our commitment to prudent cost management will continue in the coming quarters. With anticipated costs remaining at or below our current levels, we'll maintain our strategic investments in R&D activities and marketing expenses to ensure our long-term competitiveness, striking a balance between strictly monitoring discretionary spending and making strategic investments critical for our long-term growth.

展望未來，我們將在未來幾季繼續致力於審慎的成本管理。在預期成本維持在或低於當前水準的情況下，我們將維持對研發活動和行銷費用的策略投資，以確保我們的長期競爭力，在嚴格監控可自由支配支出和使策略投資對我們的長期至關重要之間取得平衡生長。

In Q4 2023, we reported adjusted operating profit of USD2.4 million, RMB17 million, which includes a non-cash USD3.5 million valuation allowance of deferred tax assets versus the operating loss of USD8 million in the same period last year as a result of the expansion in our self-branded products, gross margin and our streamlined operating expenses.

2023 年第四季度，我們報告調整後營業利潤為240 萬美元（約合人民幣1,700 萬元），其中包括遞延所得稅資產的非現金350 萬美元估值備抵，而去年同期營業虧損為800 萬美元我們自有品牌產品的擴張、毛利率和精簡的營運費用。

Now turning to the balance sheet. As of December 31, 2023, our cash and cash equivalents, along with restricted cash balance, totaled approximately USD140 million/ RMB1 billion. This positions us with ample runway to capitalize on potential marketing opportunities and invest in our business growth.

現在轉向資產負債表。截至 2023 年 12 月 31 日，我們的現金和現金等價物以及受限現金餘額總計約 1.4 億美元/ 10 億元人民幣。這為我們提供了充足的空間來利用潛在的行銷機會並投資於我們的業務成長。

We have also focused on managing our working capital efficiently. We kept inventory levels steady at USD85 million, RMB600 million, the lowest level in the company's history. We'll continue to manage inventory levels tightly as we weather the macro economy.

我們也專注於有效管理我們的營運資金。我們將庫存水準穩定在8,500萬美元、6億元人民幣，為公司歷史最低水準。隨著宏觀經濟的發展，我們將繼續嚴格管理庫存水準。

In Q4, coupled with operating profits and efficient working capital management, we achieved positive operating cash flow. This marks our six consecutive quarters of positive operating cash flow, and we expect to continue this position in the coming quarters.

第四季度，加上營業利潤和高效率的營運資金管理，我們實現了正的營運現金流。這標誌著我們連續六個季度實現正營運現金流，我們預計在未來幾季將繼續保持這一狀況。

Since Q2 2023, we have been initiated the retirement of portions of our short and long-term debt portfolio, successfully retiring USD4.8 million, RMB34 million of debt in Q2 and [USD16 million], RMB170 million in Q3.

自2023 年第二季以來，我們已開始償還部分短期和長期債務組合，在第二季度成功償還了480 萬美元、3400 萬元人民幣的債務，在第三季度成功償還了[1600 萬美元]、 1.7 億元的債務。

In Q4, we continued to reduce our debt levels by another USD12 million, RMB84 million. As our operating cash continue to strengthen, we intended to do more in the coming quarters. Furthermore, by the end of December 31, 2023, we had repurchased shares [$12.9 million].

第四季度，我們持續減少債務水準1,200萬美元，即8,400萬元。隨著我們的營運現金持續增強，我們打算在未來幾季採取更多行動。此外，截至2023年12月31日，我們已回購股份[1290萬美元]。

We remain committed to continuing our buyback program in the fourth quarter and in the quarters following that, underscoring our confidence in the company's future and our commitment to delivering long-term value to our shareholders.

我們仍然致力於在第四季度和隨後的幾個季度繼續實施我們的回購計劃，強調我們對公司未來的信心以及我們為股東提供長期價值的承諾。

Looking ahead, as I mentioned before, Q1 is traditionally a soft quarter for us. Therefore, our Q1 guidance range is projected to be USD42 million to USD49 million, RMB300 to RMB350 million. With self-branded products accounting for about 90% of the revenue.

展望未來，正如我之前提到的，第一季對我們來說傳統上是一個疲軟的季度。因此，我們第一季指引範圍預計為 4,200 萬美元至 4,900 萬美元、300 元至 3.5 億元。其中自有品牌產品約佔營收的90%。

In conclusion, the fourth quarter presented challenges that we overcome by prioritizing profitability over scale. This strategy, combined with our disciplined approach to cost management, has been instrumental in achieving encouraging performance and delivering a second consecutive quarter of non-GAAP profitability for us.

總之，第四季度提出了一些挑戰，我們透過優先考慮獲利能力而非規模來克服這些挑戰。這項策略與我們嚴格的成本管理方法相結合，有助於我們實現令人鼓舞的業績並實現連續第二個季度的非公認會計準則獲利能力。

As we look ahead, we remain confident that these strategic initiatives will continue to deliver long-term value to our investors and shareholders as well as our employees.

展望未來，我們仍然相信這些策略舉措將繼續為我們的投資者、股東以及員工帶來長期價值。

Thank you all for your time. I would now like to open the call for any questions. Operator, please go ahead.

感謝大家抽出寶貴的時間。我現在想打開電話詢問任何問題。接線員，請繼續。

Thank you. We will now begin the question-and-answer session. (Operator Instructions)

謝謝。我們現在開始問答環節。（操作員說明）

[Nicola Jones, Brooks Investments]

[尼古拉瓊斯，布魯克斯投資]

Hi, I have two questions. Please, could management provide more details on the outlook for 2024 on the first quarter and to my second question, I'd like to find out more about the company regional strategy.

你好，我有兩個問題。請管理層提供有關 2024 年第一季度前景的更多詳細信息，對於我的第二個問題，我想了解有關公司區域戰略的更多信息。

And Nicola, I mean, if you could repeat the second question, one more time for me, please?

尼古拉，我的意思是，你能幫我重複第二個問題嗎？

Yes, I'd like to get more details on the regional strategy.

是的，我想了解更多有關區域策略的細節。

Okay. On the regional strategy, Thank you. So let me take this question. I think on your first question on the outlook for first quarter and also on 2024. And I think on the first quarter, I just mentioned that typically it is a relatively soft quarter for the customer electronics industry.

好的。關於區域戰略，謝謝。那麼就讓我來回答這個問題。我想回答你關於第一季和 2024 年前景的第一個問題。我認為在第一季度，我剛剛提到，對於客戶電子行業來說，通常這是一個相對疲軟的季度。

Therefore, our guidance for the fourth quarter was between the range of [$42 million to $49 million] or equivalent to RMB300 million to RMB350 million for the top line. And normally, our guidance stops at giving the guidance only for the revenue. But in this call, I want to provide some color on full year 2024, as you asked.

因此，我們對第四季的指導範圍在[4,200萬美元至4,900萬美元]之間，即相當於人民幣3億元至3.5億元的營收。通常，我們的指導僅限於僅提供收入指導。但在這次電話會議中，正如您所要求的，我想提供一些有關 2024 年全年的資訊。

I think looking at the full year 2024, if we start from the big picture, both IDC and catalyst actually are projecting overall market value growth for the smart watch sector, which is the sector which are operating in of a single digit -- high single digit growth for year 2024.

我認為，縱觀 2024 年全年，如果我們從大局出發，IDC 和 Catalyst 實際上都在預測智慧手錶產業的整體市場價值成長，該產業的營運成長率為個位數——高個位數2024年的數字成長。

Therefore, I think our revenue growth target for 2024 at this juncture to the best of our knowledge is actually going to be on par with or higher than the overall market growth for our self-branded products on the top line, right? So I think that's the guidance on the 2024 for the full year for the sales.

因此，據我們所知，我認為目前我們 2024 年的營收成長目標實際上將與我們自有品牌產品的整體市場成長持平或更高，對嗎？所以我認為這就是 2024 年全年銷售的指引。

And coming to gross margin, as you heard what we just mentioned that our overall gross margin as a percentage of sales actually hovered in the second half of 2023 of somewhere between 30% to 35%. And we expect this gross margin to expand in the upcoming quarters and throughout 2024.

談到毛利率，正如您剛才提到的，我們的整體毛利率佔銷售額的百分比實際上在 2023 年下半年徘徊在 30% 至 35% 之間。我們預計這一毛利率將在未來幾季和 2024 年全年擴大。

And therefore, I think it's reasonable that you could anticipate that our gross margin performance is going to be at least on par with second half of 2023 or even higher than that. Right. And then the last missing puzzle of this is actually the operating costs, which is, I think we have mentioned that the run rate of our quarterly operating cost is around our RMB200 million-ish.

因此，我認為您可以合理地預期我們的毛利率表現將至少與 2023 年下半年持平，甚至更高。正確的。最後一個缺失的謎題實際上是營運成本，也就是說，我想我們已經提到我們季度營運成本的運行率大約是 2 億人民幣左右。

And we have actually maintained this run rate for more than four quarters throughout 2023. And we have been demonstrating that we are able to keep up with this cost level and digested this level if we need in the year to come. So I think that should give you a feeling where the year 2024 would bring us on the bottom line in this case. I think that should give you assess on the first quarter guidance and the full year 2024.

實際上，我們在 2023 年的四個多季度內都保持了這一運行率。我們一直在證明，我們能夠跟上這一成本水平，並在來年需要時消化這一水平。因此，我認為這應該會讓您感覺到 2024 年我們將在這種情況下實現盈利。我認為這應該能讓您對第一季指引和 2024 年全年進行評估。

Then I'm actually coming to your second question, which is our regional strategy. I think for a lot of analysts, including yourself following us, you must know that majority of our sales revenue is actually coming from the overseas market with more than half of the revenue coming from the EMEA region. And then for the remainder, we have half of that coming out of the USA and the other half coming out of the Asia Pacific region, right.

那我現在要回答你的第二個問題，就是我們的區域策略。我想對很多分析師來說，包括你自己關注我們，你一定知道我們大部分的銷售收入其實來自海外市場，其中超過一半的收入來自歐洲、中東和非洲地區。對於其餘的，我們有一半來自美國，另一半來自亞太地區，對吧。

And so I think looking at a 2024, there are a few big events in front of us, being the Olympics in Paris, in Europe and also the European Cup, which is a soccer game also in July and June, July timeframe in Europe. So Europe will be a big sports year for us and for sure, we'll also back on those big sports events in order to boost our sales for the company.

因此，我認為展望 2024 年，我們面前有幾項重大活動，包括歐洲巴黎奧運會以及歐洲杯，歐洲杯也在 7 月和 6 月舉行，7 月在歐洲舉行。因此，歐洲對我們來說將是一個重要的體育年，當然，我們也會支持這些大型體育賽事，以提高公司的銷售。

And now to mention that USA actually stands as another bright spot for growth for us because we have and made quite some advancement in the off-line channels in US, for example, we are a featured in Best Buy target and many offline channels in -- and also including Walmart in US at this moment.

現在要說的是，美國實際上是我們的另一個增長亮點，因為我們在美國的線下渠道方面已經取得了相當大的進步，例如，我們是百思買目標和許多線下渠道的特色 - - 目前還包括美國的沃爾瑪。

And we're actually expanding into more stores and also more offline channels in the USA as we speak, which we believe in 2024, we should see a reasonable growth coming out of USA for us as well.

事實上，正如我們所說，我們正在美國擴張更多的商店和更多的離線管道，我們相信到 2024 年，我們也應該看到美國的合理成長。

I think that's in a nutshell where we play in the regional structure and not to mention that in Asia Pacific region, we have markets whereby we also see a great potential, for example, Thailand, Japan, Taiwan, et cetera, et cetera, where we think we can also make a big leap of our revenue in the year to come.

我認為簡而言之，我們在區域結構中發揮作用，更不用說在亞太地區，我們也看到了巨大潛力的市場，例如泰國、日本、台灣等，等等，其中我們認為，來年我們的收入也可以實現巨大飛躍。

Thank you.

謝謝。

Sid Rajeev, Fundamental Research Corp.

Sid Rajeev，基礎研究公司

Hi. Congratulations on your strong results. I have a couple of questions on your balance sheet. You have close to $250 million in investments, market cap is just $75 million. So it seems like the market is not recognizing the value of investments you have on your books. Where do you plan these investments on a long-term basis? Any plans to divest at least a portion of it in the near term?

你好。恭喜您取得優異成績。我對你們的資產負債表有幾個問題。您擁有近 2.5 億美元的投資，而市值僅為 7,500 萬美元。因此，市場似乎沒有認識到您帳面上的投資價值。您如何長期規劃這些投資？有計劃在短期內剝離至少一部分嗎？

Yeah, Sid. It's I think you're referring to the China, a stock-listed company, which we invested and we took a minority share in that company. I think that company, if you look at it, it is actually a place into the vertical integration of our big plan for the wearables because that company to be specific actually is making the sensors and producing the chips for not only us, but also other wearable manufacturers for the smartwatch product.

是的，席德。我認為你指的是中國，一家股票上市公司，我們投資了該公司並持有該公司的少數股權。我認為這家公司，如果你看一下，它實際上是我們穿戴式裝置大計畫的垂直整合的一個地方，因為具體來說，該公司不僅為我們製造感測器和生產晶片，還為其他公司生產感測器和晶片。智慧手錶產品的可穿戴製造商。

And then in the future, I think having this company as a listed company in China, has it benefit because it cannot only supply goods to us, but also it supply goods to many other ecosystem companies which want to play in the wearable domain.

然後在未來，我認為讓這家公司作為中國的上市公司是有好處的，因為它不僅可以向我們供應商品，還可以向許多其他想要涉足可穿戴領域的生態系統公司提供商品。

And I think this is a little bit similar to the to the Apple chip strategy, but the only difference is that Apple doesn't open it to the others. And we as a player in this -- and a strong player in the smart watch domain, we would like to actually open up more to the ecosystem within China on the wearable's domain.

我認為這有點類似於蘋果的晶片策略，但唯一的區別是蘋果不向其他人開放。作為這一領域的參與者，以及智慧手錶領域的強大參與者，我們希望在穿戴式裝置領域向中國境內的生態系統開放更多。

And I think also having this listed company in China would benefit this company and our company on this specific semiconductor push, which we're going to get from the Chinese market and it's a highly competitive market.

我認為在中國擁有這家上市公司將有利於這家公司和我們公司在這個特定的半導體推動方面受益，我們將從中國市場獲得這一點，這是一個競爭激烈的市場。

So I too some extent, I think our -- if you look at the market value of the A listed company, multiply our shareholding, the value is already bigger than our market cap per se, right? Which is unfortunately, there's something in the equation which does now play, or the value has to be fully unleashed in order to realize the full value of this company. But we have no intent to sell that stake at this moment of time.

所以我在某種程度上也是，我認為我們——如果你看看A上市公司的市值，乘以我們的持股比例，這個價值已經比我們的市值本身更大了，對吧？不幸的是，等式中有些東西現在確實發揮了作用，或者必須充分釋放價值才能實現這家公司的全部價值。但我們目前無意出售該股權。

Okay. Your cash position is very strong, someone would expect will be paying down your debt sooner than what you've been doing, how much of debt would you pay down this year?

好的。您的現金狀況非常強勁，有人預計您會比您一直在做的事情更快地償還債務，今年您會償還多少債務？

I think overall in 2023, as I mentioned, actually, we've paid down more than 2 -- If I remember clearly, I think more than RMB200 million in debt. And at this moment in time, if you look at our balance sheet, we have hardly any short-term debt and we only have some long-term debt, but majority of the long-term debt is actually for the purchase of the stake in the China listed company.

我認為2023年總體來說，正如我所提到的，實際上，我們已經還清了超過2——如果我記得清楚的話，我認為債務超過2億人民幣。目前，如果你看一下我們的資產負債表，我們幾乎沒有任何短期債務，只有一些長期債務，但大部分長期債務實際上是為了購買中國上市公司。

And then we have also pledged the shares in order to make that purchase. So any assets that doesn't play into the health of the overall cash flow I have on the power. And if you look at 2024, we also have similar intent as the profitability I just mentioned and I give picture on how 2024 would be looking like.

然後我們還質押了股份以進行購買。因此，任何不影響我所擁有的整體現金流健康狀況的資產都是可以的。如果你看看 2024 年，我們也有與我剛才提到的盈利能力類似的意圖，並且我給出了 2024 年的情況。

I think together with the positive operating cash inflow, we're thinking about retiring similar amount or more than what we did in 2023 in 2024 on the debt portfolio. And that will make us -- if we do that by the end of 2024, that will give us no debt or close to no debt situation by year end.

我認為，加上正的營運現金流入，我們正在考慮在 2024 年的債務投資組合上收回與 2023 年類似金額或更多的金額。如果我們在 2024 年底之前做到這一點，那麼到年底我們將不再有債務或接近無債務。

Okay, perfect. Thank you so much, Leon.

好的，完美。非常感謝你，萊昂。

Thank you, Sid.

謝謝你，席德。

Thank you. As there are no further questions now, I'd like to turn the call back over to the company's IR Director, Grace Zhang for closing remarks.

謝謝。由於現在沒有其他問題了，我想將電話轉回給公司的投資者關係總監 Grace 張，讓其結束語。

Thank you once again for joining us today. If you have further questions, please feel free to contact Zepp Health's Investor Relations department through the contact information provided on our IR website. This concludes this conference call. You may now disconnect your lines. Thank you.

再次感謝您今天加入我們。如果您還有其他疑問，請隨時透過我們的 IR 網站上提供的聯絡資訊聯絡 Zepp Health 的投資者關係部門。本次電話會議到此結束。現在您可以斷開線路。謝謝。

This conference has now concluded. Thank you for attending, and you may once again now disconnect.

本次會議現已結束。感謝您的參加，您現在可以再次斷開連接。